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Lands’ End – Final Report

Garima Verma

Prof. Amber Cacali

12/8/2014

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Table of Contents

1. Introduction ................................................................................................................................3

2. Industry Overview – retail sector ..................................................................................................3

3. Company analysis – Lands’ End...................................................................................................4

3.1. Product portfolio..................................................................................................................5

3.2. SWOT Analysis...................................................................................................................5

3.3. Changing demographics and buying preferences ....................................................................5

3.4. Business Model ...................................................................................................................6

3.5. Retail Partnership ................................................................................................................6

3.6. Financials ............................................................................................................................6

3.7. Geographic Reach................................................................................................................7

3.8. Current Environmental and Economic Factors .......................................................................7

3.9. Corporate & Business Unit strategy.......................................................................................7

4. Competition analysis ...................................................................................................................9

5. Retail Market Strategies...............................................................................................................9

5.1 Customers ...........................................................................................................................9

5.2 Technology ....................................................................................................................... 10

5.3 Distribution ....................................................................................................................... 11

5.4 Merchandising Strategy...................................................................................................... 11

5.5 Marketing & Advertising.................................................................................................... 11

6. Current Issues & Recommendations ........................................................................................... 12

7. Future Strategic Direction and Implementation plan .................................................................... 13

8. References ................................................................................................................................ 16

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1. Introduction

Founded by Gary comer in 1963 in Chicago, Lands’ End Inc. Lands’ End is a leading multi-channel retailer of

casual clothing, accessories and footwear, as well as home products. It offers products through catalogs, online at

www.landsend.com and affiliated specialty and international websites, and through retail locations, primarily at

Lands’ End Shops at Sears and standalone Lands’ End Inlet stores. Lands’ End is the first apparel retailer to have an

e-commerce-enabled website, which was launched in 1995. It was acquired by Sears Roebuck in June 2002 and was

spin-off in 2014.

In this project, we will analyze the industry in which Lands’ End is operating. We will explore the Lands’ End

as a company in detail. We will also focus on its current customer base, strengths, weaknesses, opportunities, threats

and its business model. We will analyze its current key competitors and where Lands’ End stands among them.

Then, we will concentrate on its current business strategy. Finally, we will conclude with the recommendations

regarding its future business strategy and where it should focus to generate more revenue.

2. Industry Overview – retail sector

Lands’ End operates in retail industry sector and sells its goods through two key channels: 1) Internet and mail

Order Retail which comprises 83% of its revenue and 2) Stores which comprises rest of its 17% of revenues.

The Internet and mail-order retail industry in the US includes about 20,000 companies with combined annual

revenue of about $350 billion and exceeds $1.2 trillion globally (eMarketer report). Growth is driven in large part by

rapidly expanding online and mobile user bases in emerging markets, increases in mobile commerce sales, and the

push into new international markets by major brands. Larger firms enjoy central purchasing efficiencies and

economies of scale in inventory management, customer service, and telecommunications.

On the other hand, US clothing store industry includes about 100,000 stores with combined annual revenue of

about $180 billion. US consumers buy an average of 62 items of clothing and seven pairs of shoes annually,

according to the American Apparel and Footwear Association (AAFA). Revenue for the global apparel and footwear

industry is expected to hit $2 trillion by 2018, with emerging markets accounting for a majority of t he industry's

growth (Euromonitor International). Personal income and fashion trends drive demand for clothing. The profitability

of individual companies depends heavily on effective merchandising and marketing. The US industry is

concentrated: the 50 largest companies account for about 65 percent of industry revenue. Competition for the

clothing store industry includes department stores, discount stores, and Internet and catalog retailers. An effective

store layout positions merchandise to maximize sales. Companies keep flexible floor plans that allow them to

reposition products as needed. Exhibit – A shows the retail sales growth in US from 2011 – 2016 (expected).

Exhibit A – Total Retail Sales in US (Source: US Census Bureau)

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E-commerce and Technology: In Internet and mail-order retail industry, companies use technology to track

customer data such as purchase history, buying and search pattern. Customer database is the source for marketing

and promotional campaigns. Mobile technology is a key driver of e-commerce growth as retailers seek to reach the

rapidly growing number of consumers who shop via smartphones and tablets. Mobile retail accounts for about 15

percent of all US e-commerce sales, according to eMarketer. This share is expected to grow to more than 25 percent

of all e-commerce sales by 2017.

The Internet and mail-order retailing industry is highly seasonal. Most customer payments are via credit cards.

Pricing is an issue with both Internet and catalog retailers, as the increasing importance of discount retailers has

significantly eroded prices for many products, especially apparel. Catalog postage, shipping, and paper costs can

account for a significant percentage of company revenue. Some firms have responded to rising postage costs by

producing slimmer, lighter-weight catalogs. Internet, TV, and catalog retailing is relatively free of regulation.

Internet and catalog retailers aren't required to collect sales taxes unless they have a physical presence in the buyer’s

state.

Like internet retail industry, clothing store industry is also seasonal; peaks generally occur during the fourth

quarter, which includes the back-to-school and winter holiday shopping periods . Most stores use bar-coded tags on

clothing and point-of-sale (POS) registers to track sales. Companies are integrating their brick-and-mortar and

online worlds to provide shoppers a consistent omni-channel experience. Stores have added new programs such as

ship-from-store and reserve-in-store that allow brick-and-mortar locations to serve as distribution hubs for online

sales. Modes of payment are also changing, as more stores add mobile payment and mobile wallet technology for

customer convenience. Data security has grown into a major concern for retailers. Companies are investing in

additional security measures to protect confidential company and customer data.

Sales and Marketing: Many companies have an advertising campaign that uses national, regional, and local media,

including network and cable TV and consumer magazines. Internet retailers also use sponsored links, email, and

cooperative advertising with vendors. Internet retailers sponsor ads on other websites, and create “pop -up” ads and

special portals for online shopping. Catalogs are mailed to customers multiple times each year. The types of catalogs

are regular product, seasonal, and sale catalogs, and abridged versions typically mailed to prospective customers.

On the other hand, in clothing store industry, customer demographics vary according to an individual company's

strategy; Marketing and promotional vehicles include TV, print, and newspaper advertising; direct mail; catalogs;

social media; and in-store events. Large chains may run extensive national TV and print campaigns and in-store

events. Companies offer loyalty programs, special discounts for frequent or large purchases. Price markdowns or

discounts are a common marketing strategy and often warrant direct mail or advertising campaigns. Clearance sales

help drive store traffic and sell excess merchandise.

3. Company analysis – Lands’ End

Lands’ End Inc. is an independent public traded company after Sears Spin -off in year 2014. It markets casual

apparel for men, women, and children through its flagship and specialty catalogs, website, and about 15 free-

standing retail stores, including shops in Germany, the UK, and Japan. It also has about 275 in -store Lands' End

Shops at Sears’s locations. Lands' End also offers home goods, soft luggage, school uniforms, and logoed business

apparel and products. It has expanded its online marketing, but it still mails more than 270 million catalogs annually.

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3.1. Product portfolio

Lands’ End offers high quality great value products

through Omni channels. Their products catalogs are

segregated by:

Lands' End (clothing, accessories)

Lands' End Business Outfitters (embroidered

products for businesses)

Lands' End Home (home goods)

Lands' End Kids (children's clothing)

Lands' End Men (suits, dress shirts, ties, and other

men's clothing)

Lands' End School Uniforms (uniforms and

spiritwear)

Lands' End Women's Plus Size Collection

(women's clothing sizes 16W–26W)

Lands’ Product line

3.2. SWOT Analysis

3.3. Changing demographics and buying preferences

The firm decided to move into Internet sales in 1995, after examining the demographics of typical Lands' End

shoppers. Many Lands' End shoppers owned PCs, and they were twice as likely to have online access as the rest of

the population. Also, they typically were between age group of 36 and 55 years of age, college educated, employed

Men's, Women's

& Kids clothing

Home Products

Accessories

Soft Luggage

Corporate Gifts

Swimwear

Footwear

Strength

High quality products & fair pricing.

24/7 toll free numbers for seamless assistance

elaborate product line.

Elaborate e-catalogue and an online shop.

Excellent customer service.

Large, loyal customer base.

Timeless products.

Weakness

High dependence on online sales for the overall revenues.

Sales are highly seasonal.

Not leveraging on its vast distribution network.

Does not own any manufacturing units, completely relies on independent manufacturers from different countries.

Opportunities

A growing Asian market.

Growth in online households globally.

Leveraging existing online customer data for personal email marketing.

Complementary product sales.

Threats

Highly relied on promotions and markdowns to encourage customers.

Can face a drop in sales due to sudden fluctuation in price.

"Store within Store" business model highly depends on parent store's success. eg- stores withinn Sears.

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in a professional or managerial position, style conscious and earned an average household income of $60,000.

Adopting internet sales generated $18 million revenue within three years. Online venture also achieved consistent

profitability which also led the firm adding technology to its site that allowed shoppers to build their own outfits;

create 3-D models of their body shape to see which articles of clothing were best suited to that shape; and establish

personalized accounts that would store billing and shipping information to streamline future online purchases.

In year 1999, Lands’ End launched Lands’ End Live, an innovative live customer service program that offered

online shoppers real-time personal assistance 24 hours a day, seven days a week. These process innovations helped

Landsend.com to evolve into the leading online apparel site.

3.4. Business Model

Lands' End has a multi-channel business model.

The company offers products through catalogs,

online at www.landsend.com and affiliated specialty

and international websites, and through retail

locations, primarily at Lands’ End Shops at Sears and

standalone Lands’ End stores. In September 2013,

Lands’ End launched a global extension of core e-

commerce platform, allowing international customers

to view pricing and place orders in 60 local

currencies at www.landsend.com. The company’s

goal is to provide its customer, the highest quality

products with best customer service and great return

policy through multi-channel shopping experiences.

Currently, LE should be categorized as “cash-

cow” in growth matrix. The market share of the

company is high but the market growth is not there.

3.5. Retail Partnership

Lands’ End has retail partnership with Sears store and Shop Your Way.

Partnership with Sears Holdings: Lands’ End has shops at Sears store located in selected Sears full-line stores

across the United States. Each Lands’ End Shop at Sears features an assortment of products optimized for its

location, with most stores offering a variety of men’s, women’s and kids’ apparel and accessories, personalized

service, enhanced visual displays and a shopping lounge where customers can search all of Lands’ End offerings via

the Internet and catalog.

Partnership with Shop Your Way: As a Shop Your Way business partner, Lands’ End has been able to leverage

Shop Your Way’s innovative social shopping and networking platform. Approximately 80% of all retail purchases

at Lands’ End Shops at Sears are made by Shop Your Way members. Members earn reward points, redeem points,

when shops from both Direct and Retail segments. Through this platform, members gain access to personalized

coupons, participate in sweepstakes, build custom catalogs and share with friends.

3.6. Financials

Lands’ End recorded total revenue of $1.6 billion, $1.6 billion, and $1.7 billion for 2013, 2012 and

2011(Exhibit-B). Lands’ End recorded net income of $78.8 million, $49.8 million, and $76.2 million for 2013, 2012

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and 2011(Exhibit-C) (Source: Lands’ End Annual Statement - 10K). The decrease in Revenue from 2012 to 2013

was attributable to decreases in its direct segment of $123.9 million and its Retail segment of $15.7 million.

The US was Lands' End's best performing market, with sales up 0.5%. International sales declined largely due

to Germany and Japan. The decrease in Germany was the result of lower response rates to product offerings in that

market, while the decline in Japan was attributed to changes in currency exchange rates.

3.7. Geographic Reach

Lands' End had more than 80% of its sales in the US, 10% in Europe (the UK, France, Austria, and Germany)

and Japan accounts for less than 5% of sales.

3.8. Current Environmental and Economic Factors

Lands’ End have implemented a multi-year initiative to reduce paper consumption by sending smaller catalogs

to defined customer segments based on those customers’ preferences. These efforts have significantly reduced its

overall U.S. catalog paper consumption and it continues to improve its use of technology to ach ieve even greater

gains in this area.

3.9. Corporate & Business Unit strategy

Traditionally, Lands’ End’s primary sources of sales were catalogs. Also, it mails out more than 270 million

catalogs annually worldwide. Over the time, it has expanded its direct sales through the E-commerce website and

created a Retail segment for an in-store customer experience. Online sales represented approximately 80% of the

company's US consumer revenue in 2013, up from about 20% in 2002. Its current channels of sales are shown in

Exhibit-D below.

Lands’ End corporate strategy is to continue its growth through focusing on following strategies:

1.73

1.59 1.56

1.4

1.6

1.8

2011 2012 2013

Bil

lion

s

Revenue76.23

49.83

78.85

0

50

100

2011 2012 2013

Mil

lion

s

Profit

Catalogs

Online

www.landsend.com

affiliated

websites

affiliated international

websites

retail locations

shops at Sears store

Standalone stores

Exhibit-C Exhibit-B

Exhibit-D

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Continue digital transformation: Lands’ end is continuing its digital transformation as it allows them to accelerate

acquisition of new customers and improves digital communication with prospective customers. Also reduces

operating expenses related to paper, printing and postage.

Increase product offerings: It plans to improve and expand several product lines which are currently under-

represented in their product mix. It intends to expand these categories of its business by developing a larger and

more diverse selection of footwear, handbags, small leather goods and fashion accessories so that these product lines

represent a larger percentage of its total consumer business.

Expand our international business: Lands’ End is currently operating in Canada, Northern and Central Europe

and Japan apart from United States. It plans to increase its sales in existing international markets and develop a

presence in other areas of Europe (such as Switzerland, Russia and Scandinavia) and Asia (particularly China).

Optimize and develop its retail business: It intends to focus on increasing sales productivity in its existing Lands’

End Shops at Sears in the United States and to explore additional retail opportunities.

Grow Lands’ End Business Outfitters and School Uniforms: Over the last 20 years, Lands’ End Business

Outfitters has grown and has become a trusted brand partner for companies of all sizes . It offers quality apparel,

uniforms and related business gift and promotional products. Its current clientele includes, major airlines, financial

institutions and the hospitality industry. It also offers branded tailored and business casual apparel for office wear,

trade shows, and company events.

Business unit strategy:

i. Commitment to quality: Lands’ end has maintained its commitment in offering quality product compare to its

competitor. Despite getting product produced globally (approximately 35 countries in Asia, south Asia and South

America) by independent manufacturers Lands’ End monitor and coordinate by its Global Sourcing team based

in Dodgeville, Wisconsin. It avoid entering into long-term merchandise supply contracts as to take advantage of

opportunities to more efficiently source its products worldwide consistent with our high standards of quality.

ii. Process innovators : Lands’ end has constantly evolved its processes of Sales, Marketing and Distribution,

Customer Acquisition and Retention. Lands’ end routinely update and refine its customer list prior to individual

catalog and email mailings and monitor customer interest in its offerings as reflected by the timing and frequency

of purchases and the dollar amount of and types of products purchased.

It acquire customers through a number of different sources: catalog mailings to outside list rentals or list

exchanges, paid search and other forms of traditional and digital advertising, email marketing, via

www.landsend.com , and through the Shop Your Way program and its retail stores. Once customer identified,

communication starts with prospective customers via printed catalogs, inbound and outbound phone calls, and

via digital communications, including at www.landsend.com , by email, via search engine marketing, through

affiliate partnerships, comparison shopping engines and marketplaces, digital catalogs, social media(Facebook,

Twitter, Pinterest, Instagram, google plus, YouTube) and display advertising.

iii. Value innovators: Lands’ End values its customer and provides best customer service compared to its

competitor. Lands’ End Facebook page has garnered more than one million likes from its customers. It creates a

one-on-one relationship with each customer. Its customer care representatives are available 24 hours a day, seven

days a week and 364 days a year. This provides a significant competitive advantage because it allows them to

provide real-time individualized attention to its customers across more than six million telephonic interactions

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each year. Lands’ End also offers apparel sales including men’s, women’s and kids’ apparel, footwear and

accessories to its customer.

4. Competition analysis

The apparel industry is a highly competitive

industry. Lands’ End competes with a diverse group

of direct-to-consumer companies and retailers,

including national department store chains, men’s

and women’s specialty apparel chains, outdoor

specialty stores, apparel catalog businesses,

sportswear marketers and online apparel businesses

that sell similar lines of merchandise. Its 3 top

competitors are L.L. Bean, Eddie Bauer LLC and J.

C. Penny.

Comparison of Lands’ End and its competitor on

Porter’s strategy matrix is shown is Exhibit-E.

Compared to its competitor, Lands’ End is more

focused to its target market segment and low cost

leadership. However, it marginally differentiates in

terms of its product line compared to its competitor.

Lands’ End placement in Maslow Hierarchy Need is

shown in Exhibit- F. Comparison chart of Lands’ End

and its competitor’s annual sales report of year

“2013” shown in Exhibit-G.

Porter’s Generic Strategic Matrix

Maslow Hierarchy Need Competitors’ Annual Sales (2013)

5. Retail Market Strategies

Lands’ End Retail business sells products and services through standalone Lands’ End Inlet stores and

dedicated Lands’ End Shops at Sears across the United States. Each Lands’ End Shop at Sears features Lands’ End

products, personalized service, enhanced visuals and a shopping lounge where customers can search all of its

offerings via the Internet and catalog. Lands’ End Shops at Sears offer a selection of products for men, women and

kids and select stores offer footwear and products for the home.

5.1 Customers

Lands’ End has a large and loyal customer base. It reacts to every existing and prospective customer /

households on the basis of their responses to its advertising, by constantly updating its customers list prior to

Walmart

EB, LLB

JCP

LE

Fo

cu

sN

o F

ocu

s

Low Cost Differentiator

Self Actualization

Esteem Need

Social Need

Security Need

Psy cology (Lands' End)

Exhibit-G Exhibit-F

Exhibit-E

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individual catalog email mailings. It also monitors customers timing and frequency of p urchases and the dollar

amount on types of product they spend.

Lands’ End current customer base is consisting of affluent, college-educated, professional and style-conscious

women and men. In 2013, the average annual household income of its customers was approximately $103,000 and

approximately 44% of its customers were within the 36–55 age group.

Comparison of number of people shopped at Lands’ End stores and its competitor Eddie Bauer store for clothes

(last 3 months) in USA 2014 from spring 2008 to spring 2014 (in millions) are shown in Exhibit-H.

(Source: Statista 2014)

Customer Acquisition and Retention

Lands’ End acquire customers through a number of different channels: catalog mailings to outside list rentals or

list exchanges, paid search and other forms of traditional and digital advertising, email marketing, via

www.landsend.com , and through the Shop Your Way program and retail stores.

To retain the identified customer, it communicates with prospective customers via printed catalogs, inbound and

outbound phone calls, and via digital communications, including at www.landsend.com , by email, via search engine

marketing, through affiliate partnerships, comparison shopping engines and marketplaces, digital catalogs, social

media and display advertising.

Lands’ End projects itself as pro E-commerce company who is always their where its prospective customers are

no matter their platform or location. Lands’ End is trying to be in top of the mind of its customer through every

possible media.

5.2 Technology

Lands' End has been the ultimate role model in how to use technology in business. The transition they made

from Catalog Company to e-commerce Company benefitted the customer and the company.

By the time the competition took the plunge, the dot-com bubble had burst and Lands' End already had honed

its site into a sophisticated and lucrative component of its direct sales operation. Its information technology systems

provide comprehensive support for the design, merchandising, importing, marketing, distribution, sales, order

processing and fulfillment of its products. Lands’ End has a dedicated information technology team that provides

strategic direction, application development, infrastructure s ervices and systems support for the functions and

Exhibit-H

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processes of its business. Lands’ End Business Outfitters websites and our international Lands’ End websites are

operate out of its own internal data centers as well as through hosting relationships with th ird parties.

Lands’ End has also grown its social advertising space. Social media presence such as Facebook have made

positive changes to its platforms, it has given the company an opportunity to engage directly with its customers . Its

Facebook page has generated around 1.2 million likes and it also provides opportunity to communicate directly with

their customers and take feedback and incorporate them. Similarly, it has grown around 57K twitter followers,

around 8 k followers on Instagram and Pinterest followers. All these social media is a major contributor in

increasing direct communication as well as getting direct feedback on every aspect of its business.

5.3 Distribution

Since the mid-1980’s Lands’ end have been operating internationally. Currently it conducts business in seven

countries and ship products to approximately 157 countries around the world. It has in-country offices in the United

Kingdom (established 1993), Japan (established 1994) and Germany (established 1996) which has helped

establishing extensive direct sales, distribution and customer service. In addition, it also has catalog and e-commerce

channels in Austria, France and Canada. E-commerce platform, allows its international customers to view pricing

and place orders in 60 local currencies at www.landsend.com.

Lands’ End owns and operates three distribution centers in Wisconsin to support U.S. Direct and Retail

businesses and a portion of its international business. Dodgeville, WI facility of Lands’ End is approximately 1.15

million square feet and is a full-service distribution center. Its Reedsburg location is approximately 500,000 square

feet and offers all order fulfillment services. Its Stevens Point distribution center is approximately 215,000 square

feet and focuses on supporting Lands’ End Business Outfitters with embroidery services. Customer orders shipping

are via UPS or the U.S. Postal Service.

It also owns and operates a distribution center in the United Kingdom based in Oakham. It is approximately

175,000 square feet and does order fulfillment and specialty services for European businesses. It also leases a 60,000

square foot distribution center in Fujieda, Japan.

5.4 Merchandising Strategy

Lands’ End merchandising and financial systems are coupled with its e-commerce platforms and point-of-sale

systems which allows for effective merchandise planning and sales accounting.

Sources of Raw Materials: Lands’ End purchase raw materials and supplies essential for its operations from

numerous suppliers around the world, including United States.

Orders: Orders are generally filled on a current basis.

Facilities and Store Locations: Lands’ End owns or lease domestic properties and international offices, customer

sales/service centers, distribution centers and retail stores. Most of its stores are located inside of existing Sears

stores.

5.5 Marketing & Advertising

After becoming an independent company in April 2014, Lands’ End shares have increased nearly 8 percent

after said its earnings jumped 48 percent in its first quarterly report as a standalone public company. The company

focused mainly on increasing promotions, more targeted marketing campaigns and on cost controls.

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Lands’ End is also investing in digital display and digital video. It also takes paid search to enhance brand

campaigns and to be more targeted and relevant in their advertising. To attract more new customers, it also offers

special deals and discounts in holiday seasons, sweepstakes and other attractive markdown offers year round. It

continuously works on providing the best experience for its customers when they visit its website.

6. Current Issues & Recommendations

i. Financial independence after Sears spin off

After spin off from Sears, Lands’ End standalone operating costs is expected to increase approximately by

$8.0 million to $10.0 million to support its businesses, including management personnel, legal, finance, and

human resources as well as certain costs associated with being a public company. In addition, it estimates one-

time information technology costs related to the spin-off to be approximately $2.0 million to $3.0 million.

Recommendation: Even though its cash flows from operations is expected to be sufficient to fund these

additional operating charges, Lands’ End should monitor these additional costs closely and should try to reduce

these costs by various cost cutting measures. For example:

1) Ensure that there are no duplications of any support functions (HR, IT, Legal etc.).

2) Employ business practices to increase their cost efficiencies. For example: develop and improve on

automated solutions for as many functions as possible, cross -functional training of employees etc.

ii. Underperforming stores within Sears stores

Lands’ End and Sears have different customer base. Lands’ End customers are more affluent and weren’t

used to shopping in Sears and many Sears’s customers couldn’t afford Lands’ End prices. Keeping Land end

product in Sear’s store did not prove to be profitable for both Sears and Lands’ End.

Recommendation: Now after spin off from Sears, Lands’ End should focus on following: increasing its

independent store presence. It is in the process of reducing its store presence within Sears’s stores but it will

take some time (Exhibit – I). One thing Lands’ end has to ensure is that every independent store it will open in

future should be in the area where they will find its target customers (affluent) easily.

Exhibit I: Current plan to close down the stores within Sears and corresponding savings

iii. Security breach of customers information

In the current scenario, customer data security is a big problem, retailers are facing. Recently Target, Home

Depot and K-mart have gone through this issue. Lands’ End is one of the biggest e-commerce companies. It’s

very important for them to ensure that they do not face this problem especially at the time when they are trying

to reestablish themselves.

Lands’ End – Final Report Page 13 of 16

Recommendations: Lands’ End should make relevant investments to avoid any data breach because it will cost

them more than its peers and secondly, they are not in a position to lose any existing customer at present

situation.

iv. Reliance on promotions and markdowns to encourage consumer purchases

Lands’ End uses heavy promotions and discount strategy to attract consumer. This could prove to be a

wrong strategy for its future sales. Consumer has a tendency to start identifying the brand for their discount

offers and they wait for such offers to make any purchase. It also devalues the brand’s identity.

Recommendations: Lands’ End has an affluent customer base and is known for its quality product offerings.

Instead of offering year round markdowns and discounts, it should focus on promoting its value for price. It

should engage consumers in offers like: consumers buys a product on full price and test its quality for a

guaranteed period of time else return it on full price. This will also increase confidence of consumer in the

brand.

v. Sales are highly seasonal

One of the current problems Lands’ End is facing today is that their sales are highly seasonal and not year

round. This can affect their future growth strategy. This needs to be taken care of on priority basis.

Recommendations: To solve this issue Lands’ End can focus on creating store events in relation to their CSR

practice and encourage its customers to join in. The merchandise sale can share a small profit margin with the

concern cause. Consumers oversee the practicality and functions of product performance over the emotional

connect with the brand. Cone Communication reported that 94% of customers tend to switch brands if the brand

is associated with any good societal cause.

vi . Does not own any manufacturing units

Lands’ End products are manufactured in approximately 35 countries and substantially all are imported

from Asia, South Asia and South America. But it does not own any manufacturing unit on its own.

Recommendations: Lands’ End should have a backup plan for their most salable and special merchandise

which generates high revenue. For example: order placement at two different vendor sources.

7. Future Strategic Direction and Implementation plan

Spin off from Sears has provided Lands’ End a great opportunity to analyze its current strategy and build a solid

strategic direction in which it will be able to regain its strong customer base and grow its revenue. In addition to

addressing the current short term issues, I think LE should develop on long term strategic direction focusing on the

following.

1. Venture/expand in Mobile retail commerce: According to e-marketer the mobile retail commerce industry is

expected to grow three times from 2013 to 2018 in US itself. In 2018, U.S. mobile retail revenues are expected

to amount to 133.35 billion U.S. dollars, up from 42.28 billion U.S. dollars in 2013 (Exhibit – J).

Lands’ End – Final Report Page 14 of 16

Exhibit-J (Source: Statistica 2014)

Exhibit-J1 Revenue Estimate

I believe Lands’ End has a great opportunity to increase its market share in this segment. With the given mobile

commerce (Exhibit-J) data, if Lands’ End is able to capture even 1%, its estimated revenue will grow up to $1.3

billion by year 2018. Exhibit J1 shows the estimated revenue till 2018 for 1%, 2% or 5% of market capture.

Implementation Plan: It should build a full-fledged customer friendly mobile application for iOS and Android

devices. It should make sure that all the customer’s eye catchy featu res (sweepstakes, special discounts) of its

website are featuring on the mobile application too. It should feature and promote its mobile app on every social

media platforms, website and catalogs.

2. Partnership with Amazon Online Retail Stores: LE has a great online catalog and it should try to leverage

that strength by building a partnership with the online e-commerce business which already has a great

penetration with the consumers such as Amazon. (Exhibit – K). Lands’ End can tie-up with Amazon for

selective merchandise which is mid-price range (basic clothing’s and accessories) and seasonal items. It will

help in increasing its customer base as well as revenue.

Exhibit-K (Source: Statistica 2014)

Exhibit-K1 Revenue Estimate

I believe Lands’ End has a great opportunity to increase its market share in this segment as well. With the given

popularity of Amazon website (Exhibit-K), if Lands’ End partners with Amazon and features its merchandise

on Amazon website and even if 1% of amazon.com visitors make a purchase of $20 per month, it will be able to

generate estimated annual revenue of $400 million. Exhibit-K1 shows the estimated revenue generated from

1%, 2% or 5% of amazon.com visitors who purchase Lands’ End product.

Implementation Plan: For partnering with amazon, Lands’ End will have to build a strategic partnership

agreement which will have a detail outline of business and profit outcome, profit sharing and other legal details.

# of Unique Visitors 168000000

Average Sales / Month $20

Potential LE Customers 1% 2% 5%

Total Revenue / year $403,200,000 $806,400,000 $2,016,000,000

Lands’ End – Final Report Page 15 of 16

Lands’ End will also identify the merchandise mix which will be featured on Amazon website to maximize

customer reach. It will also ensure that these products get more visibility on the website durin g customer search.

3. Sub-brand for younger (15-35 years) customers: Another profitable future strategy Lands’ End should tap in

to is to create a sub-brand to target younger household customer segment. According to WSJ, 79 million people

who make up the millennial generation wield $200 billion in annual spending power. Shoppers age 25 to 44

plans to spend the most of any age group, about $820, in holiday seasons (according to the NRF). Further to

this Lands’ End should focus on capturing the online shoppers of millennial age group which is 25%-27% and

growing (Exhibit-L). This generation at their mature age (Baby Boomer stage) can switch to Lands’ End.

A great example of such strategy is Victoria’s Secret’s “PINK”.

Exhibit-L (Source: Statistica 2014)

Exhibit-L1 Revenue Estimate

Assuming approximately 80 million people fall in age-group of 15-35 years with annual spending capacity of

approximately $1600 (Exhibit-L), if we are able to capture 0.01% of this population, we will be able to generate

estimated annual revenue of $155 million. Exhibit- L1 shows the estimated annual revenue generated for 0.01%,

0.02% or 0.05% consumers acquired by Lands’ End.

Implementation Plan: Lands’ End has to focus on introducing new styles and color assortment in their

merchandise with great quality which matches the taste of younger customers to attract this segment. This age-group

does not really give importance to a particular brand; they prefer creating their own brand by mixing and matching

products from different brands. To capitalize on this behavior, Lands’ end has to offer merchandise mix where

customers have choice to build their own ensemble. They also have to invest heavily in social media promotion to

reach out these customers one to one basis.

# of Younger customers 80,000,000

Average annual apparel

expenditure 1613

Potential LE Customers 0.01% 0.02% 0.05%

Total Revenue / year $154,800,000 $309,600,000 $774,000,000

Lands’ End – Final Report Page 16 of 16

8. References

Hoovers

http://www.hoovers.com/company-information/cs/company-profile.LANDS_END_INC.de33019b0ea06bf7.html

Lands’ End

http://www.landsend.com/newsroom/le_sears/overview/index.html

Lands’ End 10K Annual Report

http://investors.landsend.com/secfiling.cfm?filingid=1193125-14-114621&cik=799288

http://investors.landsend.com/secfiling.cfm?filingid=1193125-14-114621&cik=799288

Business Models-Merchant model

http://ecommerce.hostip.info/pages/152/Business -Models-MERCHANT-MODEL.html

Statistica

http://ezproxy.limcollege.edu:2323/statistics/231269/people-who-shopped-for-clothes-at-lands-end-within-last-3-

months-usa

http://ezproxy.limcollege.edu:2323/statistics/231263/people-who-shopped-for-clothes-at-eddie-bauer-within-last-3-

months-usa

http://ezproxy.limcollege.edu:2323/statistics/271450/monthly-unique-visitors-to-us-retail-websites

http://ezproxy.limcollege.edu:2323/statistics/249855/ mobile-retail-commerce-revenue-in-the-united-states

http://ezproxy.limcollege.edu:2323/statistics/321540/online-retail-g lobal-age-distribution